It can be difficult to perfectly calculate the cost of building a house. Some degree of uncertainty is found in project site conditions, time and labor allotment, risks, and our human preferences and behaviors. In project management, change orders are a common and natural communiqué between the owner, contractor, and architect that modify the contract to accommodate new conditions and scope of work. The change order could be created for a number of reasons: to correct the estimated project cost, to adjust for an unforeseen obstacle or for possible efficiencies, to add or modify features and options, and more. More often than not, change orders ask for time and money to be added to the project.
In the fall of 2012 one of our San Francisco Bay Area projects broke ground. The total construction cost was estimated to be $201,025. It is coming to completion this spring. From beginning to end, 12 change orders were created. For illustrative purposes, they are (not necessarily in this particular order):
Change in Project Cost ($)
Found two buried concrete walls in the middle of the backyard that needed removal with a jackhammer
|Sanitary Sewerage Utilities|
Replaced main home sewer
Changed type and layout
Credit after finding a better product for a better price
Upgraded to a stain grade cedar siding
|Manufactured Gutters and Downspouts|
The building inspector requested an additional downspout
|Interior Finish Hardware|
The client picked some nicer (and more expensive) window and door hardware
|Exterior Doors and Windows|
A window size was modified
|Plumbing Piping – Gas Connection|
A washer/dryer location was moved and the gas line had to be moved as part of that.
Added an Energy Recovery Ventilator to improve indoor air quality
|Electric Panel Upgrade|
Increase in the main home’s electric panel
Note that one of the items is negative, a savings passed on to the client.
These change orders sum up to about $9,380, increasing the total construction cost by 4.67%. This is a tiny addition to the initial estimate – a great outcome for all parties as the budgeting was practically right on. Our client is ecstatic and cannot wait to move in.
Over the years New Avenue has learned to control and tame change orders. Our management process provides owners with a standardized and consistent experience with contractors. Project development phases, construction progress, and our contracting agreements are tightly tied to an expansive and inclusive budget control and invoice form. By showing our clients all the aspects of their project alongside change orders on one sheet, we provide defensible transparency, minimize undesirable change orders, and keep the project on course. We strive to protect homeowners from dishonest and crafty contractor practices like underbidding to win a project then abusing change orders to reflect the true costs of construction or overbidding and absorbing under-running costs. These are needless hurdles for the uninformed homeowner that can be agonizing to deal with when they get out of control.